Planning systems are used by enterprises in various industries to plan operations. Conventional transactional execution systems include ERP (Enterprise Requirements Planning), MRP and MRPII (Material Requirements Planning), and DRP (Distribution Requirements Planning) type systems. Other, more complex systems can be used to integrate enterprises and execute planning strategies provided the enterprises use compatible data specification formats. One such complex system is the RHYTHM system available from I2 TECHNOLOGIES located in Dallas, Tex. The RHYTHM System uses a flexible network based approach of operations, resources and buffers to model a supply chain rather than a traditional hierarchical approach.
Conventional transactional execution systems such as the ERP/MRP/DRP type systems are typically architected as hierarchical to pass data between independent nodes rather than to solve planning and scheduling problems as they exist throughout a supply chain. Dependencies for multiple enterprises between demand, material, capacity, logistics, customer allocations, supplier allocations, and related business constraints are not solved by these conventional systems. When using conventional transactional execution systems, each enterprise generates its own plan from its point of view. Sequential data transfer between enterprises in a supply chain is used to share information. This transfer of data can provide some information to aid the planning of operations for an enterprise.
One conventional technology used by enterprises to share information is EDI (Electronic Data Interchange). This protocol provides a way to administer change management and control within a supply chain. However, EDI has problems with respect to achieving customer driven goals such as real time order promising and true supply chain cost optimization, assembly coordination, and inventory deployment. Using the automotive industry as an example, a considerable portion of the cost build up for a vehicle is overhead in the supply chain due to attempts to plan operations based upon old, inaccurate or limited information. Even with EDI, the lack of bidirectional vertically integrated production plans within the supply chain causes problems in that plans are constructed based upon old or inaccurate information and material and capacity exceptions at each level are not solved before requirements are passed to the next level in the supply chain, thus compounding problems down the supply chain.
In general, supply chains can be placed into one of two categories: tightly coupled or loosely coupled. A tightly coupled supply chain is one in which there is little substitution of vendors or suppliers of materials and parts within the supply chain. These types of supply chains are characterized by complex bills of materials and by products that have a higher sophistication with requirements that are more detailed and more deeply involved. Tightly coupled supply chains are generally lean in that they are characterized by a low inventory environment. An example of a tightly coupled supply chain is the automotive industry. On the other hand, a loosely coupled supply chain is one in which there is relatively heavy substitution between vendors and suppliers of products and parts. An example of a loosely coupled supply chain is a consumer packaged goods supply chain such as one driven by customer demand at a large retail store.
Conventional planning processes implemented by enterprises in either type of supply chain are not characterized by close cooperation. Generally, the supply chains are composed of separate enterprises with each running a separate transactional execution system. The degree of planning across the enterprises to plan for the whole supply chain is relatively nonexistent. Consequently, it becomes difficult to effectively coordinate and create business relationships that efficiently and effectively fills customers needs. It is desirable to plan for the entire supply chain, as closely to real time as possible, and to propagate information forward and backward between enterprises.